Yesterday (INCOME TAX FILING DAY), Standard and Poor's announced that they may have to downgrade the credit rating of the United States of America unless something is done about the national debt by the 2012 ELECTION. Immediately afterwards, a scheduled protest by the TEA PARTY was held in Chicago. REPUBLICAN POLITICIANS in Washington, DC and other state capitols claimed vindication. Verrrrrry inter-resting, but .......... stuuupid.

He said, "If you don't give me the deed to your ranchI'm gonna throw you on the railroad tracks!"And then he grabbed her (and then)He tied her up (and then)He threw her on the railroad tracks (and then)A train started comin' (and then, and then...!)

Monday, April 18, 2011

"The U.S. government's net debt is not about to reach 100% of GDP. Hysteria about the U.S. debt/GDP ratio breaking 100% is due to a misconception regarding which figure to calculate Federal debt. You can't count money the Federal government owed to itself:"

POLICEPAY.NET COMMENT

Low interest rates drive up debt. High interest rates drive down debt. The world has lost its mind. Everyone is a Chicken Little today. Junk economics is being preached by every snake oil salesman on the planet, including S&P (the same guys that saw the interest rate problem coming - ha!) Read this guy's article. He has one of the few functioning brains left.

Saturday, April 16, 2011

Norman city manager, Steve Lewis, announced yesterday that the effects of "The Great Recession" continue to wreak havoc on the city's budget. The biggest revenue decline since the 1930's has this Oklahoma University town on its financial knees. In the same address, the manager rolled out the proposed budget for FYE 2012. We must warn you that it is ugly. The austerity of "fiscal responsibility" is too much for many people to stomach. The manager has called for freezing step pay increases, no cost-of-living increases, and requiring employees to contribute more toward health insurance. A "Smart Hiring Freeze" will remain in place. Look at this chart of the city's governmental revenue for the last ten years. As you can see, revenue has gone into the tank the past several years - down, down, down.

Don't say we did not warn you, the chart is ugly. Notice how the revenue was flat for 2001 through 2007, but look what happened starting with 2008 - a dramatic decline began and continues today. The bottom line? The City of Norman is in the tank.

As might be expected, the Fraternal Order of Police, The Norman Firefighters, and the AFSME workers have lashed out against these draconian, but absolutely necessary measures. When asked about the 600 pound gorilla in the living room (declining revenue), IAFF president Butch Crawford responded by saying "What decline?" Obviously, the firefighters remain in a state of denial about the city's financial plight.

We spoke with Mayor Cindy Rosenthal, and asked for her thoughts on why revenue continues to be in a free fall. She immediately said "tax revenue - the life blood of the city." Look at this chart showing the rapid decline in tax revenue for the city. Again, we must warn you. This is very "graphical" - we do not recommend letting children, pregnant women, and the elderly look at this.

Later, we caught up with city finance director, Anthony Francisco, and asked what was being done to address the fatal decline in revenue. Mr. Francisco said that he and the city manager had slashed expenditures and told us to check it out for ourselves. We did and here is a chart showing this blood letting.

Whew, he is right - this ain't pretty. Look at that reduction in spending. Oh, the humanity. One of the lingering questions we were wanting answered was "why is the litigation continuing concerning last year's firefighter arbitration?" We spoke with city attorney, Jeff Bryant, in his office. He was very forth coming. According to Mr. Bryant, the reasons are two fold:

1 - We are sick of dealing those arrogant city employees
2 - The Oklahoma Municipal League asked us to throw the "Hail Mary" pass

There you have it - the truth. Ah, how refreshing.

Well, that just about sums it up. Here are the facts:

1 - Revenue has declined sharply the last three years
2 - The declined is the result of eroding tax revenue
3 - Large expenditure cuts have been implemented to offset the loss of revenue
4 - The city attorney continues to fight for our rights (sovereign immunity)

As of Friday, talks were continuing with the City of Moore and the City of Noble concerning annexation of Norman by one of the two. Moore seems to be the better choice, but their city officials are concerned about the militant employee unions in Norman. The City of Noble is working with the City of Lexington, and the City of Slaughterville in hopes of having a county wide city government with its city hall in Etowah and named "OU Football."

To you welfare queens, yes you city employee union thugs, we have had enough and we are not going to take it anymore. We are going to get through this, one way or another. Either you lead, follow, or get out of the way.

"I pledge allegiance to Scott Walker, Chris Christie, John Kasich and the mantra they stand for, one dogma, under God, with liberty and justice for some."

Footnote: To those of you with a functioning brain. The charts presented are the facts. The text is satire. Just keep asking yourself this question: "Who are you going to believe? Me, or your lying eyes?"

Council President Jim Hall said a mutual understanding was reached Thursday night with the Fraternal Order of Police, after about a month of negotiation, and that he hopes to sign the new agreement at the council’s Monday meeting.

After reaching a tentative agreement on concessions with the firefighters' union, Mayor Scott Schertzer met with three Fraternal Order of Police Ohio Labor Council units representing police road officers, supervisory officers and communications workers for police and fire."

Hays County commissioners unanimously approved an employment contract this week that guarantees police a 3.52-percent average raise this year and two percent raises in each of the following two budget years.

The 30-month agreement, effective April 1, increases police base pay by a total of $605,796, aligns salaries with years of service, and brings starting pay closer to the market minimum for counties with similar population and growth, according to county officials."

Friday, April 15, 2011

WKSU News: Akron will not pay for police raise despite court ruling: "Akron police will not see raises in their next paychecks -- despite a court ruling this week.The city had gone to Summit County Common Pleas Judge Robert Brown to try to get him to delay raises that were ordered by a state conciliator. Conciliation is part of the collective-bargaining process for police and firefighters in Ohio."

Saturday, April 09, 2011

The Governmental Accounting Standards Board (GASB) will soon be issuing new rules for pension accounting for state and local governments. For most pension plans, the new rules will show the plans to be underfunded to a greater degree than what is presently being reported.

GASB and its twin FASB (Financial Accounting Standards Board) are nothing but accounting whorehouses for governments and big corporations. Trust me, the purpose of GAAP (Generally Accepted Accounting Principles) is not to provide useful information to people and organizations doing business with a government or corporation. No large city or corporation is required to drop its pants in front of it's shareholders, citizens, lenders, or employees - and none is doing it voluntary. In fact, GAAP is a financial statement burka.

What is the truth about pension plan funding? I hate to say this, but here goes - virtually every governmental pension plan has assets overstated and pension liability understated, by a substantial amount. I do not know about you, but to me the value of an asset is what I could sell if for within a reasonable length of time. The value of a liability is the amount I would have to pay to settle it in full today. Well, that is not what GAAP prescribes. In a convoluted pig Latin it defines these two rather simple concepts so that a German Enigma Machine is required to get to the truth, or even close.

The current asset valuation method used by most pension plans is like a round of golf where you only record par, birdie and bogey (80% - 120% five year smoothing). Anything better than one under par is recorded as a birdie. Anything more than one over par is recorded as a bogey. Wow, that is a great rule. Since I normal shoot triple boogies, I could suddenly become competitive. What do you do with the with extra strokes. You bring back with you the next time you play. I would have to have a trailer just for the unrecognized strokes. Will the new rules ruin the duffer's life saver? Mostly, but not entirely. There will be an escape clause, in the event you are tanking in the sand traps and water hazards.

Pension liability accounting is the real floozy of the GASB brothel. Imagine you go to Las Vegas with your wife. Considering that you have a gambling addiction and you are a poor player of blackjack, your wife has a tight leash on you. She has you on a daily allowance of $100. Luckily, the floor manager is an "old buddy" from your home town and extends you a $30,000 line of credit. As usual, you drop the entire $30,000, plus the $100 from your wife, on the blackjack table the first night.

Sitting at the bar sipping on a comp beverage, you are contemplating either suicide or joining the French Foreign Legion, when the guy next to you starts up a conversation. Eventually, you tell him about your financial problems. As luck would have it, he is from GASB. He immediately tells you about the GAAP rules for pension liabilities. Under those rules, all dumb and rash moves (grandfathering large changes in pension benefits) are made stealthy by the use of amortization. Your actions of the night certainly meet the dumb and rash criteria. Under the rules, you spread the loss over a thirty year period, meaning that your GAAP loss for tonight is One G and three dollars, enough to get your butt whipped, but not a divorce.

The new rules will clean up this canard, but not completely. One thing that will survive is the most popular, but dishonest, valuation method - Entry Age Normal (way beyond the scope of this conversation). With today's computers, the "real liability" is easily obtainable.

As always, the three spinster gatekeepers of public finance ( Fitch's, Moody's, and S&P) will go bananas when the new rules go into effect. As I have said many times, pension funding level is not a financial issue. It is a political issue - a real hot potato. Currently, I am analyzing the history of pension plans in several large cities that have single employer public safety pension plans. Hopefully, this will allow us to make sense of the current pension debate. In the mean time, stock up on Roll Aids and prepare for the bond rating companies 19th hundred nervous breakdown, which will lead to more demands for pension benefit reduction.

COMMENTARY BY POLICEPAY.NETThis appears to be an honest error by a Republican County Clerk. As much as we would like for it to be a political hijacking, it isn't. The Democrats back up her story. Don't get too invested in this as a conspiracy. As shocking as they may find it, Republicans make mistakes also.

Thursday, April 07, 2011

Yesterday, in one of the most unbelievable statements ever made by a politician, Speaker of the House, John Boehner said there was no daylight between him and The Tea Party. It appears that the Speaker has been drinking from the Tea Party's punch bowl, because he was repeating all of their simple minded talking points. Hopefully, the Speaker will reconsider his remarks.

John Boehner is an intelligent, articulate and very likable person. Of all of the members of Congress I have met, I found John Boehner to the one I liked the most, even though he was not supporting my issue. He was very polite and attentive, and willing to listen.

Wednesday, April 06, 2011

"Madison — Unofficial results Wednesday showed Assistant Attorney General JoAnne Kloppenburg with a paper-thin lead over Justice David Prosser after a race marked by massive voter turnout, Gov. Scott Walker's union bargaining plan and record spending by outside interest groups.

As of 2:15 p.m., The Associated Press had tallied results for all of the state's 3,630 precincts and Kloppenburg had taken a 204-vote lead after Prosser had been ahead most of the night by less than 1,000 votes."

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Tuesday, April 05, 2011

These are not tough economic times. There is no financial crisis. The economy is at a record high for every year since Adam and Eve. Unemployment does not matter. Housing does not matter. The only thing that matters is the number of Cadillacs coming out the back door of the plant. There are more coming out that door than ever before. Most states, counties, and cities are experiencing record high revenue. Unfortunately, we are experiencing a record high number of lies and liars. Sluggish recovery? Out and out lie. Huge budget deficits? Fabricated!.

The brainwashing that has many people falling for these lies has taken on its own existence. What are the facts?

Economy - All Time High

The Recovery Is Brisk

Growth Rates For Current Recovery and The Previous Two After 18 Months